I 


13  JL. 


6  j 


iiii 


Reprinted  from  The  Annals  of  the  American  Academy  of  Political  and  Social 

Science,  Philadelphia,  July  1915.  Mi  mi  SlMm*  if)  i 

Publication  No.  898.  ,u  A 


4 


THE  EFFECT  OF  THE  EUROPEAN  WAR  ON  AMERICA’S 
TRADE  WITH  INDIA 

By  Daniel  Folkmar, 

Editor  of  Handbook  of  India ,  Department  of  Commerce. 


Fifteen  years  ago  I  heard  a  distinguished  geographer  lecture  in 
Paris  on  the  Pacific  as  the  future  center  of  the  world's  commerce. 
That  is  what  I  want  to  preach,  the  gospel  of  the  future  of  the  Far 
East  and  of  the  New  Pacific.  It  can  be  more  easily  grasped  today 
than  fifteen  years  ago,  for  since  then  the  Canal  has  been  dug  and 
Japan  has  beaten  Russia  and  risen  to  a  place  of  first  importance  in 
deciding  the  destiny  of  nations.  Japan  has  forged  ahead  in  our 
international  trade  until  it  takes  one-half  of  all  the  goods  we  send 
to  Asia.  China  comes  next,  and  has  vaster  possibilities  than  Japan. 

British  India  stands  third  among  the  countries  of  Asia  as  a 
buyer  of  American  goods  and  is  the  farthest  of  the  Far  East  from 
our  shores.  It  is  exactly  half-way  around  the  globe  from  the 
United  States,  east  and  west,  and  because  of  its  position  on  the 
Indian  Ocean  it  must  perhaps  be  considered  a  permanent  appendage 
of  Europe  commercially  rather  than  an  integral  part  in  the  trade 
of  the  New  Pacific.  Yet  our  trade  with  India  is  already  of  vast 
importance,  and  a  study  of  it  during  the  last  few.months  of  the  war 
is  interesting  as  an  example  of  the  general  condition  which  the  Euro¬ 
pean  catastrophe  has  brought  on  throughout  the  entire  civilized 
world.  It  illustrates  the  results  of  the  stoppage  of  shipping,  es¬ 
pecially  during  the  cruise  of  the  Emden  in  Indian  waters,  the  dis¬ 
turbance  of  financial  and  general  industrial  conditions  through 
interference  with  production  in  Europe  and  abroad,  and  the  embar¬ 
goes  laid  upon  certain  exports  and  imports  by  England.  I  also 
find  in  a  study  of  the  most  recent  figures,  some  of  which  are  herewith 
published  for  the  first  time,  a  complete  demonstration  not  only  of 
the  decrease  in  trade  during  the  first  months  of  the  war  but  of  a 
decided  increase  during  the  last  month  or  two  as  compared  with 
^previous  years.  An  interesting  question  suggests  itself: — may  this 
not  be  one  of  the  cases  in  which  an  expected  permanent  loss  in  the 
trade  of  Germany  and  Austria  is  already  being  diverted  to  the 

1 


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(6 


2  The  Annals  of  the  American  Academy 

United  States?  And  is  it  not  possible  that  the  far  greater  trade  of 
England  in  India  will  be  diverted  in  some  measure  to  this  country? 
In  the  case  of  England  this  may  not  be  because  of  the  war  so  much 
as  because  of  serious  opposition  in  India  itself  to  trade  with  Great 
Britain,  which  is  just  now  becoming  manifest  under  the  name  of  the 
Swadeshi  movement. 

While  the  Swadeshi  movement  was  directed  in  the  first  place 
against  all  foreign  goods  and  strove  for  the  upbuilding  of  native 
industries,  it  is  becoming  directed  against  England  more  and  more 
in  the  hands  of  political  agitators  and  revolutionsts  in  India,  and  to 
some  extent  in  favor  of  American  trade.  I  do  not  know  the  relation 
of  Prince  Sarath  Ghosh  to  the  Swadeshi  movement,  but  I  heard  a 
significant  statement  from  him,  as  an  expert  student  of  the  economic 
history  and  industries  of  his  native  country.  In  a  recent  address 
in  America,  he  said: 

Our  importations  from  England,  first,  then  from  Germany,  France  and 
Austria,  were  tremendous.  Now  the  market  is  open  for  other  goods,  and  if 
America  seizes  the  opportunity  she  can  hold  much  of  this  trade.  You  are  looking 
to  South  America  for  your  market.  Meanwhile,  you  overlook  India,  where  more 
than  300,000,000  people  are  making  surprising  strides  in  civilization,  so  that 
their  needs  far  outstrip  the  present  importations.  .  .  .  There  are  the  many 

products  we  bought  from  England  and  the  Continental  nations.  We  must  look 
elsewhere  for  chemicals,  medicine,  drugs,  machinery,  building  materials,  and 
scores  of  other  manufactured  products.  Wonderful  opportunities  await  the 
alert  American  merchant. 

Notwithstanding  the  advantage  England  has  over  other  coun¬ 
tries  in  obtaining  the  trade  of  India,  British  India  is  already  one  of 
the  nine  or  ten  greatest  purchasers  of  American  goods  outside  of 
Europe.  In  fact,  there  are  only  ten  countries  in  Europe  which 
buy  more  from  us  annually  than  does  India.  But  this  gives  no 
indication  of  the  vastness  of  India  as  a  market  and  the  possibilities 
in  the  increase  of  American  trade  in  that  country,  for  the  United 
Kingdom  holds  at  present  70  per  cent  of  its  import  trade,  and,  in 
fact,  more  than  95  per  cent  of  the  Indian  purchases  in  the  largest 
line,  that  of  cotton  piece  goods. 

India  has  always  cut  a  figure  of  first  importance  in  the  trade 
of  the  world.  Students  of  Indian  trade  point  out  that  the  rulers 
and  governments  that  have  controlled  it  have  become  the  wealthiest 
of  the  world.  India  in  1910  ranked  eighth  in  the  list  of  all  importing 
countries  and  eleventh  in  the  list  of  the  exporting  countries  of  the 


America’s  Trade  with  India 


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world.  India’s  purchases  of  British  exports  were  equal  to  the 
purchases  of  Canada,  Australia,  South  Africa  and  New  Zealand, 
combined.  The  total  import  trade  of  India  from  Great  Britain 
amounts  to  $330,000,000  per  year,  of  which  more  than  $180,000,000 
is  for  cotton  goods.  India  takes  two-fifths  of  the  entire  value 
of  the  exports  of  Great  Britain  to  all  countries. 

This  is  all  the  more  astonishing  when  the  poverty  of  the  masses 
of  India  is  taken  into  account.  The  purchasing  power  per  capita 
is  only  $2  as  compared  with  $80  in  Australia.  This  indicates  the 
inevitable  character  of  the  greater  part  of  India’s  purchases.  Goods 
must  be  cheap.  But  the  total  profit  is  immense  because  the  300,- 
000,000  of  India’s  population  must  be  clothed — largely  with  the 
products  of  foreign  cotton  mills — and  must  have  simple  agricultural 
tools  and  even  large  amounts  of  machinery  for  the  equipment  of 
native  industries. 


India  As  a  Buyer  of  American  Goods 

The  great  proportions  that  American  trade  has  already  reached 
in  India  will  be  better  realized  from  the  following  details: 

British  India  is  the  largest  buyer  in  the  world  of  our  cheapest 
cotton  goods,  excepting  only  China — I  am  speaking  of  our  $15,000,- 
000  export  of  unbleached  cottons.  British  India,  including  Aden, 
which  politically  belongs  to  British  India,  takes  one  and  a  half  times 
as  much  of  our  unbleached  cottons  as  all  South  American  countries 
combined.  India  buys  more  than  $3,000,000  worth  of  our  iron  and 
steel  manufactures  and  more  than  $3,000,000  worth  of  our  petro¬ 
leum.  Among  all  the  countries  of  the  world,  India  stands  tenth 
in  rank  as  a  purchaser  of  our  lamp  oils,  and  sixth  in  rank  as  a  pur¬ 
chaser  of  our  lubricating  oils,  the  purchases  of  the  latter  amounting 
to  more  than  $1,000,000  per  year.  In  this  line  India  is  equalled  as 
a  buyer  by  only  one  South  American  country,  Argentina. 

As  to  the  particular  lines  of  iron  and  steel  manufactures  pur¬ 
chased  by  India,  only  one  other  country,  Canada,  buys  so  much 
hoop  and  band  iron  from  the  United  States  as  India;  only  three 
other  countries  buy  more  wire  nails  from  us  than  India;  only  five 
other  countries  buy  more  non-galvanized  iron  sheets  and  plates  from 
us;  only  eight  other  countries  take  a  larger  share  of  our  $16,000,000 
export  of  structural  iron  and  steel — including  one  country  in  South 


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The  Annals  of  the  American  Academy 


America;  only  ten  other  countries  buy  as  much  of  our  $5,000,000 
or  $6,000,000  export  of  tin  plate  as  India;  and  only  ten  other  coun¬ 
tries  buy  as  much  structural  machinery  as  India  out  of  our  total 
export  of  $8,000,000. 

Even  our  tools  are  used  in  India  in  great  numbers.  For  exam¬ 
ple,  our  saws — outside  of  Europe,  India  is  one  of  the  twelve  largest 
purchasers  from  us  in  the  world;  and  of  our  miscellaneous  tools, 
amounting  to  an  export  of  $8,000,000,  only  five  other  non-European 
countries  buy  so  largely  from  us  as  India.  The  same  is  true  of  wire: 
before  the  war,  at  least,  India  bought  more  barbed  wire  from  us 
than  any  country  in  Europe,  except  England.  Even  our  patent 
medicines,  typewriters,  and  automobiles  go  in  amazingly  large  pro¬ 
portions  to  India.  Only  six  other  countries  have  taken  so  much  of 
our  total  export  of  $7,000,000  worth  of  patent  medicines;  only  twelve 
other  countries  have  taken  so  many  typewriters^which  might 
have  been  thought  to  be  a  luxury  rather  than  a  necessity  in  so  poly¬ 
glot  and  primitive  a  country  as  is  India;  and  as  regards  the  most 
notorious  luxury  of  the  age,  automobiles,  India  was  one  of  the  fif¬ 
teen  largest  purchasers  of  our  total  exportation  of  $21,000,000. 
Last  of  all,  I  will  mention  a  significant  and  unexpected  fact:  of  our 
total  export  of  $3,000,000  worth  of  lamps,  no  country  in  the  world 
bought  so  many  as  India,  with  the  one  exception  of  Canada,  which 
is,  of  course,  commercially  a  part  of  ourselves. 

India  is  today  the  world’s  greatest  buyer  of  the  goods  upon 
which  America’s  future  development  largely  depends,  that  is,  cer¬ 
tain  manufactured  products.  India  is  the  greatest  foreign  purchaser 
of  European  manufactures.  It  has  been  evident  for  many  years 
that  America’s  trend  in  commerce  has  been  away  from  the  agri¬ 
cultural  exporting  business  of  the  earlier  years  and  in  the  direction 
of  increased  production  and  trade  in  large  manufactures.  India, 
as  an  agricultural  nation,  must  buy  what  America  most  wants  to 
sell  as  a  growing  manufacturing  nation.  It  is  simply  a  case  of  bring¬ 
ing  together  the  buyer  and  the  seller. 

Much  has  been  said  about  capturing  South  American  trade. 
India  has  300,000,000  inhabitants  that  must  be  clothed  and  pro¬ 
vided  with  a  wide  range  of  manufactured  goods,  while  South  Amer¬ 
ica’s  population  is  less  than  50,000,000.  India  has  vast  wealth 
inherited  from  preceding  generations  and  is  the  most  densely  popu¬ 
lated  portion  of  the  globe;  South  America  is  as  yet  the  most  thinly 


America’s  Trade  with  India 


5 


populated  great  division.  In  railroad  mileage  India  stands  fourth 
among  the  great  countries  of  the  world,  ranking  below  only  the 
United  States,  Russia  and  Germany.  India  has  more  railroads  than 
Canada,  or  Great  Britain  and  Ireland;  more  than  all  the  other 
countries  of  Asia  combined. 

The  imports  of  British  India  in  the  fiscal  year  1913-1914 
amounted  to  $752,000,000,  and  the  exports  to  $831,000,000.  Of 
the  imports,  36  per  cent  were  cotton  goods,  a  line  in  which  the 
United  States  is  rapidly  increasing  its  production,  while  its  possi¬ 
bilities  as  the  chief  cotton  producer  of  the  world  are  almost  unlimited. 
Second  in  order  in  the  value  of  India’s  imports  are  metals;  manu¬ 
factures  of  iron  and  steel  form  about  9  per  cent  of  the  total  imports. 
Thus  about  45  per  cent  of  the  total  imports  of  British  India  last 
year  were  composed  of  the  classes  of  articles  for  which  the  United 
States  has  special  facilities  of  production  and  ranks  among  the 
world’s  greatest  producers,  and  more  than  three-fourths  of  the  im¬ 
ports  of  India  were  of  the  classes  of  merchandise  which  the  United 
States  produces  and  exports.  Yet  in  spite  of  this  fact,  less  than  9 
per  cent  of  India’s  imports  in  1913-1914  were  from  the  United 
States. 

The  exports  of  the  United  States  to  India  are  increasing  more 
rapidly  in  value  than  the  imports,  although  they  are  much  less  in 
value  than  the  imports.  According  to  the  official  statistics  of  the 
United  States,  imports  from  British  India  increased  only  from 
$48,000,000  in  1902  to  $50,000,000  in  1912,  while  the  exports  from 
the  United  States  to  India  more  than  trebled  in  size  in  the  same  ten 
years,  rising  from  a  total  of  $4,600,000  in  1902  to  $15,600,000 
in  1912.  The  total  imports  of  India  from  all  countries  by  sea 
reached  the  astounding  total  of  $752,000,000  in  1914,  and  its  exports 
a  total  of  $831,000,000.  “The  wealth  of  the  Indies”  is  the  only 
phrase  that  adequately  describes  it. 

Principal  and  Permanent  Effect  of  the  War — Loss  of  Trade  with 
Germany  and  Austria 

What  has  been  and  will  be  the  effect  of  the  war  on  this  enor¬ 
mous  trade,  especially  as  concerns  the  United  States?  The  immedi¬ 
ate  effect  is  of  small  consequence,  compared  with  the  final  effect, 
which  is  sure  to  come,  except  in  so  far  as  the  former  indicates  the 


§;  The  Annals  of  the  American  Academy 

latter.  The  final  effect  that  we  can  clearly  foresee  is  the  permanent 
loss  of  trade  which  Germany  and  its  allies  will  suffer  in  India  as  a 
British  possession.  England  will  never  let  it  “  come  back.”  Other 
belligerents  also  may  lose  some  of  their  Indian  trade  permanently 
to  the  United  States,  especially  Belgium;  possibly  also,  France. 
Even  England  may  lose  portions  of  her  Indian  trade  if  the  United 
States  gets  a  good  start  on  it  during  the  war;  for  example,  in  cotton 
goods,  which  you  will  remember  is  the  chief  trade,  and  even  more 
certainly  in  those  manufactures  of  iron  and  steel  and  machinery 
in  which  the  United  States  naturally  excels.  I  do  not  need  to  reca¬ 
pitulate  our  natural  advantages  over  competing  trade,  residing  in 
our  iron  and  coal  fields  and  the  cheaper  methods  of  production  which 
are  being  introduced,  and  especially  in  the  natural  genius  for  inven¬ 
tion  which  the  world  recognizes  in  America,  which  has  grown  in 
part  out  of  the  necessities  of  a  new  country,  and  which  has  enabled 
us  already  to  lead  the  world  in  agricultural  machinery  and  similar 
products  that  characterize  America.  Desperately  as  our  trade  is 
handicapped  at  present  by  the  lack  of  American  shipping,  this  will 
right  itself  in  time.  Our  other  delinquencies  also  will  be  overcome. 
We  shall  learn  how  to  adapt  our  manufactures  to  the  peculiar  de¬ 
mands  of  such  great  buyers  as  India  and  how  to  pack  and  mark 
our  goods  as  England,  and  particularly  Germany,  have  learned  to 
do,  and  how  to  best  extend  our  trade  by  sending  representatives 
abroad;  and  when  advertising  and  commercial  travellers  and  com¬ 
mission  houses  and  especially,  in  India,  English  houses,  will  not  in 
the  nature  of  the  case  extend  the  sale  of  American  goods  as  branch 
American  houses,  and  more  adequate  organization  may  do. 

What  will  be  our  chief  gain  in  India  from  the  war  ?  Note 
that  the  three  belligerents  which  will  naturally  have  lost  the 
most  of  their  trade  with  India  have  exported  four  times  as  much 
merchandise  to  that  country  as  did  the  United  States.  In  other 
words,  first  in  rank  after  Great  Britain’s  share  in  the  total  imports 
into  British  India  stood  Germany,  sending  about  7  per  cent  of  the 
total;  and  then  the  United  States,  Austria-Hungary  and  Belgium, 
all  nearly  even  in  rank  (the  United  States  2.6  per  cent;  Austria- 
Hungary  and  Belgium,  2.3  per  cent  each);  then  came  France, 
contributing  only  1.5  per  cent  of  India’s  imports,  and  Italy,  con¬ 
tributing  1.2  per  cent.  Germany  has  been  the  most  important  re¬ 
cent  competitor  of  Great  Britain  in  Indian  trade.  The  increase  in 


America’s  Trade  with  India 


7 


German  sales  of  metals,  cottons,  woolens,  hardware  and  cutlery, 
machinery,  glass  and  glassware,  and  paper,  was  considerable. 
Germany,  next  to  Austria-Hungary,  easily  competed  in  the  glass 
trades.  Of  Belgium’s  exports  of  about  $14,000,000  worth  of  goods 
to  India  annually,  many  were  goods  of  German  origin.  The  articles 
from  Belgium  which  showed  considerable  increases  recently  were: 
cotton  goods,  coal-tar  dyes  and  iron  and  steel.  The  coal-tar  dyes 
purchased  in  India  were,  of  course,  mainly  German.  The  steel  trade 
of  Belgium  with  India  was  the  trade  which  Great  Britain  had  re¬ 
cently  most  to  fear.  It  consisted  chiefly  of  bars  and  channel  steel. 

Excepting  Germany  and  Belgium,  other  countries  of  the  conti¬ 
nent  had  but  a  small  foothold  in  the  Indian  import  trade.  Austria- 
Hungary  exported  only  $10,000,000  or  $15,000,000  worth  of  goods 
per  year.  At  times  half  of  this  amount  was  in  sugar.  Other  lines  of 
some  importance  were  glassware,  hardware  and  cutlery,  and  cotton 
manufactures.  The  smaller  sales  of  France  in  British  India  amounted 
to  $6,000,000  or  $7,000,000  per  year,  consisting  mainly  of  liquors, 
clothing,  woolens  and  silks.  The  only  other  trade  worthy  of  particu¬ 
lar  notice  is  that  of  Japan.  Its  sales  to  India  have  increased  greatly, 
nearly  doubling  in  five  years.  They  amount  to  more  than  $15,000,- 
000,  more  than  one-third  in  1913  being  silk  manufactures.  Other 
leading  items  were  cotton  hosiery,  metals  and  matches. 

The  British  and  Indian  governments  have  been  quick  to  see 
the  opportunities  resulting  from  Germany’s  loss  in  Indian  trade 
and  have  issued  a  Blue  Book  covering  the  subject.  I  repeat  some 
figures  from  it,  which  sums  up  the  situation  during  the  first  months 
of  the  war.  The  figures  given  are  for  the  calendar  year  1913  and 
the  official  year  ended  March  31,  1914: 

The  total  Indian  imports  from  Germany  and  Austria  in  1913 
were  valued  at  $55,000,000,  which  was  more  than  one-tenth  as 
much  as  all  the  imports  into  India  from  all  other  parts  of  the  world. 
In  other  words,  of  India’s  total  import  trade  in  private  merchandise 
in  1913-1914,  nearly  7  per  cent  was  with  Germany  and  2.3  per 
cent  with  Austria-Hungary.  At  least  75  per  cent  of  Germany’s 
imports  into  India  were  of  goods  such  as  the  United  States  should 
be  able  to  sell.  Thirty  per  cent  of  her  sales  were  of  metals,  in¬ 
cluding  manufactures;  11  per  cent  were  of  cotton  manufactures; 
and  8.5  per  cent  were  of  woolens:  these  three  items  making  a  total 
of  exactly  50  per  cent  of  the  goods  sold  by  Germany  to  India  and 


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The  Annals  of  the  American  Academy 


being  in  lines  in  which  we  are  best  able  to  compete.  Smaller  items 
among  the  imports  from  Germany  are:  hardware,  machinery  and 
millwork,  railway  plant  and  rolling  stock,  oils,  glass  and  glassware, 
haberdashery  and  millinery,  paper  and  pasteboard,  liquors,  and 
silk  manufactures,  the  last  and  smallest  item  amounting  to  less 
than  2  per  cent  of  the  total  and  the  other  items  being  in  lines  which 
interest  us.  The  only  important  line  of  imports  in  which  Germany 
has  been  above  competition  as  a  manufacturer  has  been  that  of 
dyes;  her  sales  of  dyes  into  India  amounted  to  7.4  per  cent  of  the 
total  imports  into  India  from  Germany. 

India’s  imports  from  Austria-Hungary  are  perhaps  of  less  in¬ 
terest  to  us,  for  the  largest  item,  one-third  of  the  entire  import, 
is  sugar.  Items  interesting  to  us  are:  glass  and  glassware,  20  per 
cent;  cotton  goods  and  hardware,  8  per  cent  each;  and  haberdashery, 
5  per  cent.  These  five  items  cover  three-fourths  of  Austria- 
Hungary’s  sales  to  India. 

Put  into  dollars,  the  principal  imports  into  India  from  Ger¬ 
many  that  may  interest  us  were  as  follows:  metals  (excluding  ores), 
$12,524,000,  of  which  mixed  copper  or  yellow  metal  for  sheeting  was 
the  largest  item,  amounting  to  $3,280,000;  cotton  manufactures, 
$4,596,000,  including  blankets,  $2,054,000,  colored  piece  goods, 
$1,187,000,  and  hosiery,  handkerchiefs  and  shawls,  $1,071,000; 
woolens,  $3,484,000,  mainly  shawls  and  piece  goods;  and  hardware, 
machinery  and  millwork,  railway  plant  and  rolling  stock,  amount¬ 
ing  to  $4,725,000.  Germany  even  sold  miscellaneous  kinds  of 
mineral  oils  to  India  amounting  to  $1,049,000.  Minor  imports 
from  Germany  which  are  worthy  of  notice  comprised:  engines, 
electrical  and  musical  instruments,  gold,  silver,  and  embroidery 
thread,  cement,  bricks,  umbrellas,  stationery,  biscuits  and  cakes, 
condensed  milk,  ivory,  furniture  mouldings,  paints,  starch  and 
farina,  artificial  and  mineral  manures,  motor  cars  and  wagons 
and  clocks  and  other  timepieces. 

The  values  of  India’s  principal  imports  from  Austria-Hungary 
during  the  period  1913-1914  were  as  follows:  sugar  (16  D.  S.  and 
above),  $4,487,000;  glass  and  glassware,  $2,837,000,  composed 
principally  of  glass  bangles;  cotton  goods,  $1,095,000,  principally 
colored  and  printed  piece  goods;  and  hardware,  $1,085,000,  princi¬ 
pally  unenumerated  iron  ware.  Minor  items  are:  haberdashery 
and  millinery,  German  silver,  nails  and  rivets,  stationery,  writing 


America’s  Trade  with  India 


9 


paper  and  envelopes,  woolen  piece  goods,  safety  matches  and  wear¬ 
ing  apparel.  Still  less  in  value  among  imports  from  Austria- 
Hungary  were:  hosiery,  strong  boxes  of  metal,  iron  and  knitting 
wool,  timber,  electrical  instruments,  boots  and  shoes  of  other  ma¬ 
terial  than  leather,  noils  and  warp,  earthenware  and  soap. 

The  total  number  of  vessels  cleared  at  British  Indian  ports  to 
Germany  in  1913-1914  was  163;  the  total  number  cleared  to  Austria- 
Hungary  was  108.  While  these  figures  look  large  compared  with 
American  shipping  to  India,  they  form  only  6  per  cent  of  the 
total  number  of  vessels  which  cleared  British  Indian  ports  during 
the  year. 

Immediate  Effect  of  the  War — Freight  Increases 

Let  us  turn  now  to  the  latest  official  information  regarding 
the  immediate  effect  of  the  war  on  our  trade  with  India.  Before 
quoting  the  latest  American  figures  available  at  the  Department 
of  Commerce  I  may  say  in  short  that  they  disclose  a  rapid  increase 
in  trade  in  January  and  February  as  compared  with  all  previous 
trade,  in  spite  of  the  decreased  trade  of  the  six  months  ending  in 
December.  This  increase  in  the  last  two  months’  trade  comes  de¬ 
spite  the  fact  that  shipping  facilities  between  America  and  India 
have  been  worse  during  these  months.  The  vessels  cleared  at 
United  States  ports  for  India  in  January  had  only  half  the  tonnage 
of  those  cleared  in  January  a  year  ago;  the  vessels  cleared  in  Feb¬ 
ruary,  1915,  had  but  little  over  a  third  of  the  tonnage  of  the  clear¬ 
ances  of  February,  1914. 

This  deficiency  in  shipping  is  accompanied  by  gradually  in¬ 
creased  freight  rates  and  is  part  of  a  world-wide  situation  which 
need  be  referred  to  but  briefly  and  which  may  be  vividly  illustrated 
by  consular  reports  received  within  the  last  week.  I  should  prem¬ 
ise  this  showing  with  the  statement  that  there  is  at  present  but 
one  line  making  direct  trips  between  America  and  India,  the  Amer¬ 
ican  and  Indian  line,  since  the  German  Hansa  line,  which  was  the 
principal  line  for  direct  shipments  before  the  war,  is,  of  course, 
unable  to  continue  in  the  trade,  and  a  considerable  number  of 
British  steamers  formerly  engaged  in  direct  service  between  the 
United  States  and  India  have  been  requisitioned  by  the  British 
authorities. 


10 


The  Annals  of  the  American  Academy 


It  will  also  be  remembered  that  the  German  cruiser  Emden 
exercised  a  disastrous  material  as  well  as  moral  effect  upon  ship¬ 
ping  with  India  early  in  the  war,  having  even  bombarded  the 
port  of  Madras.  The  consul  at  Madras  reported  that  as  a  re¬ 
sult  of  the  official  announcement  made  early  in  November  of 
the  destruction  of  the  Emden,  two  steamers  immediately  cleared 
from  the  port,  both  of  which  carried  large  shipments  for  the  United 
States. 

New  freight  rates  to  the  Far  East  amounting  to  an  increase 
of  forty  per  cent  over  the  rates  obtaining  before  the  war  were  an¬ 
nounced  a  week  ago  in  the  daily  publication  of  the  Department 
of  Commerce  in  a  report  from  the  consul  general  at  Hongkong. 
Similar  rates  have  been  agreed  upon  by  way  of  both  the  Panama 
and  Suez  Canals,  effective  as  of  April  1.  This  includes  an  increase 
of  ten  per  cent  made  in  the  rates  soon  after  the  opening  of  hostilities 
in  Europe.  The  reasons  given  for  this  increase  apply  to  shipping 
everywhere:  the  disappearance  of  German  and  Austrian  vessels 
from  the  sea,  the  use  of  a  large  number  of  British,  French  and  other 
vessels  for  transport  service  or  as  auxiliary  cruisers,  and  the  de¬ 
mand  for  tonnage  otherwise  for  war  purposes. 

The  reasons  for  the  crisis  in  Far  Eastern  shipping  are  given 
fully  in  a  memorandum  read  at  a  joint  meeting  of  chambers  of  com¬ 
merce  in  Manila  thus: 

1.  The  whole  large  German  mercantile  fleet  is  at  present  either  captured 
or  interned  in  neutral  ports.  While  a  few  of  the  captured  vessels  have  already 
been  made  available  by  the  allied  governments  for  mercantile  purposes,  these 
boats  are  being  used  by  the  Allies  themselves  for  transport  purposes. 

2.  The  allied  governments  have  requisitioned  a  large  proportion  of  the  better 
class  of  mercantile  tonnage  for  war  purposes. 

3.  For  some  four  or  five  months  some  of  the  main  French  and  British  ports 
have  been  closed  to  commercial  work,  and  the  remaining  ports  have  been  unable 
to  handle  the  enormous  amounts  of  produce  and  foodstuffs  which  have  been 
poured  into  them.  This  has  caused  delay  of  as  much  as  two  months  in  the  dis¬ 
charge  of  the  steamers,  and  has  prevented  them  from  being  able  to  get  back  to 
producing  countries  to  load  new  cargoes. 

4.  The  causes  above  stated  have  led  to  the  comparatively  small  number 
of  neutral  vessels  being  chartered  at  high  rates  to  go  on  long  trips  to  Europe,  and 
have  thereby  cleared  the  Orient  of  vessels  it  depended  upon  for  the  shorter  trades. 
The  usual  supply  of  Japanese  steamers  which  could  formerly  be  called  upon  in 
case  of  stringency  is  finding  profitable  employment  partly  in  these  long  European 
charters  and  partly  in  its  own  special  work. 


America's  Trade  with  India 


11 


The  result  of  this  situation  in  the  Philippines  is  that 

in  Iloilo  thousands  of  tons  of  sugar  are  pouring  into  the  market  without  not  only 
tonnage  to  move  it,  but  enough  warehouses  to  store  it.  The  steamers  now  serv¬ 
ing  the  Islands  leave  them  full  to  their  utmost  capacity.  The  irony  of  fate  is 
that  there  are  seventeen  German  freight  and  passenger  steamers  interned  in 
Manila  Harbor  waiting  the  end  of  the  war. 

The  memorandum  further  stated  that  freight  rates  from  the 
Philippines  to  the  United  States  had  increased  about  threefold, 
on  hemp  increasing  from  $15  per  ton  last  year  to  $45  per  ton  at  the 
present  time,  and  on  sugar  from  $7.50  per  ton  last  year  to  $20  per 
ton  at  present. 

Trade  Decreases  During  Six  Months ,  Then  Increases 

As  I  have  indicated,  notwithstanding  the  increased  freight  rates, 
our  export  trade  with  India  (excluding  kerosene),  increased  12  per 
cent  in  January,  1915,  as  compared  with  January,  1914,  and  5  per 
cent  in  February,  1915,  as  compared  with  February,  1914.  This 
shows  a  revival  in  trade  following  the  serious  decrease  of  7  per  cent 
in  our  export  trade  with  India  during  the  preceding  six  months  (as 
compared  with  the  six  months  ended  December  31,  1913).  The 
following  figures  for  January  and  February  apply  to  the  port  of 
New  York  only,  and,  together  with  some  of  the  details  for  the  pre¬ 
ceding  six  months,  are  from  the  unpublished  customs  returns  in 
the  Department  of  Commerce. 

It  is  interesting  to  note  that  the  increased  trade  in  January 
and  February  was  largely  in  the  same  classes  of  merchandise  that 
show  a  falling  off  in  the  trade  of  the  preceding  six  months.  Among 
such  articles  may  be  singled  out,  for  instance:  plows  and  culti¬ 
vators,  patent  medicines,  brushes,  unbleached  cottons,  insulated 
electrical  appliances  and  motors,  bottles  and  miscellaneous  glass¬ 
ware,  household  goods,  bolts  and  hinges,  firearms,  iron  pipes  and 
miscellaneous  manufactures  of  iron  and  steel.  Many  other  Ameri¬ 
can  manufactures  show  an  increased  exportation  from  the  United 
States  to  British  India  even  during  the  first  period  of  six  months, 
as:  miscellaneous  agricultural  implements,  of  which  $20,198  worth 
were  exported  from  American  ports  in  the  six  months  ended  De¬ 
cember  31,  1914,  more  than  three  times  the  value  exported  during 
the  corresponding  period  in  1913,  and  this  was  followed  in  January 


12 


The  Annals  of  the  American  Academy 


with  an  exportation  valued  at  $4,093  as  compared  with  an  export 
of  only  $347  in  January,  1914.  Other  large  increases  in  exports 
from  the  United  States  to  India  during  last  January  or  February 
as  compared  with  the  same  months  in  1914  were  in:  oatmeal  and 
other  food  preparations,  lubricating  grease,  belting,  automobile 
tires,  steel  bars,  metal-working  machinery,  wire,  miscellaneous 
machines  and  surgical  appliances. 

There  were  many  other  articles  in  which  our  exportations 
decreased  during  the  first  months  of  the  war  and  had  not  yet  re¬ 
covered  in  February.  I  cite  only:  illuminating  oil,  mowers  and 
reapers,  passenger  automobiles  (these  decreased  from  $239,775  to 
$99,441  in  the  six  months’  period  already  cited,  slightly  decreased 
in  January  and  decreased  again  to  one-half  the  exportation  of  a 
year  ago  in  February),  motor-cycles  and  miscellaneous  vehicles, 
certain  minor  cotton  manufactures,  electrical  appliances,  medical, 
optical  and  other  instruments,  razors  and  miscellaneous  cutlery, 
stationary  and  traction  engines,  mining  machinery,  typewriters 
(our  export  of  $132,842  worth  in  July  to  December  1913,  fell  to 
$93,957  worth  during  the  same  months  of  1914  but  nearly  re¬ 
covered  their  normal  value  in  January  and  February),  steel  plates 
(the  exports  of  steel  sheets  increased),  axes,  saws  and  other  tools, 
barbed  wire,  lamps  (the  sales  during  the  six  months’  period  in  1913 
totaled  $314,685,  but  fell  to  less  than  one-third  of  this  sum  in  the 
last  six  months  of  1914),  men’s  shoes,  harness  and  saddlery,  rosin, 
spirits  of  turpentine  (a  small  decrease,  the  export  for  the  half  year 
being  about  $12,000  in  each  case),  paint  and  varnish,  playing  cards 
(we  sold  over  $20,000  worth  during  the  half  year  in  question), 
leaf  tobacco  and  cigarettes  (exports  of  plug  have  increased  during 
the  war  excepting  in  January),  and,  finally,  fir  lumber  (nearly 
$100,000  worth  being  sold  in  the  last  six  months  of  1913  and  about 
one-tenth  of  this  in  the  same  period  in  1914).  These,  I  repeat, 
are  articles  of  which  our  exports  decreased,  as  might  be  expected, 
as  a  result  of  the  war. 

Our  trade  with  India  was  in  some  respects  more  adversely 
affected  by  the  war  than  our  trade  with  the  world  at  large — the 
belligerent  powers  always  excepted — although  not  so  seriously  af¬ 
fected,  for  example,  as  our  trade  with  South  America.  Both  our 
imports  and  our  exports  in  trade  with  India  in  January  of  this  year 
amounted  to  about  70  per  cent  of  the  value  of  the  correspond- 


America’s  Trade  with  India 


13 


ing  trade  of  January  of  last  year,  while,  including  the  United  King¬ 
dom,  our  imports  to  all  countries  in  January,  1915,  were  about 
80  per  cent  of  the  corresponding  imports  of  1914  and  our  exports 
reached  the  large  volume  of  130  per  cent  of  the  January  exports  of 
1914.  Again,  during  the  seven  months  ended  January  31,  1915,  our 
imports  from  British  India  ran  about  as  in  January,  70  per  cent  of 
the  imports  of  the  preceding  year,  while  our  imports  to  all  countries, 
including  the  United  Kingdom,  were  87  per  cent  of  those  for  the 
corresponding  period  in  1914;  but  our  exports  to  British  India 
during  this  period  of  seven  months  ran  even  with  our  exports  to  all 
other  countries  during  the  corresponding  period.  In  other  words, 
our  exports  during  the  last  seven  months  ended  in  January  were  90 
per  cent  as  large  as  those  of  the  corresponding  months  of  1914, 
both  in  the  case  of  India  and  of  all  countries  combined. 

Our  trade  with  South  America  shows  greater  fluctuations  than 
our  trade  with  India.  Our  imports  from  South  America  show  an 
increase  of  118  per  cent,  whether  comparing  the  seven  months’ 
periods  as  before  or  comparing  January  last  with  January 
of  1914.  On  the  contrary,  however,  our  exports  to  South  America 
show  the  smallest  per  cent  I  have  yet  given,  a  fall  to  56  per 
cent,  comparing  the  seven  months  ending  in  January  each  year. 
They  show  a  more  favorable  figure,  that  is  a  fall  to  81  per  cent, 
comparing  the  months  of  January,  1914  and  1915. 

In  conclusion,  I  have  shown,  I  think,  that  the  door  of  oppor¬ 
tunity  stands  wide  open  at  the  present  moment  for  great  trade  with 
India  and  that  the  opportunity  will  be  vastly  greater  when  the 
shipping  problem  is  solved,  as  we  must  and  will  solve  i;t.  I  have 
shown  that  it  is  one  of  the  greatest  trades  of  the  world;  that  it  is 
of  greater  importance,  in  many  respects,  in  its  future  possibilities 
than  our  trade  with  South  America;  and  that  it  makes  a  special 
appeal  to  America  as  an  integral  factor  of  the  age-long  campaign 
which  we  must  enter  upon  in  order  to  sustain  our  natural  domi- 
naney  in  the  commerce  of  the  Far  East  and  of  the  New  Pacific,  the 
future  center  and  chief  arena,  says  the  Paris  savant,  of  the  com¬ 
merce  of  the  world. 


